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BREAKING NEWS | THIS WEEK'S ISSUE





Preservationists move to save High Line

by Philip Lentz

Preservationists trying to save the High Line have asked the U.S. Surface Transportation Board not to approve demolition of the abandoned rail line on Manhattan’s West Side.

A group called Friends of the High Line wants the 1.45-mile track preserved as an elevated walkway as part of the federal government’s "rails-to-trails" program. The group argued before the STB that the High Line’s historic significance was not recognized when the federal government first issued a demolition order in 1992.

Under a settlement reached between owners of the land under the rail line and CSX Corp., which owns the line, CSX asked the STB to approve demolition earlier this month.

Even if the STB approves demolition, a court case now in progress could delay it. A state Supreme Court justice said in April that the demolition must go through the city’s extensive land review process; the property owners have appealed that ruling.
Copyright 2004, Crain Communications, Inc


Spitzer cuts music royalty deal



New York state Attorney General Eliot Spitzer announced a deal with the country’s top recording companies that returns millions of dollars in unclaimed royalties to thousands of artists.

The agreement, which follows a two-year-long investigation by Mr. Spitzer’s office, requires Sony Music, Warner Music, Universal Music, EMI, and BMG to keep better track of royalties owed to artists and their descendants. The AG’s office found that the companies had failed to keep in touch with star entertainers, including David Bowie, Sean Combs and Liza Minnelli, as well as obscure one-hit wonders.

Since the investigation began, the recording companies have already returned more than $25 million to those who were owed payments; an additional $25 million is expected to be distributed as part of the settlement. In addition, the companies will list on their Web sites the names of artists and writers who are owed royalties; post ads in trade publications describing the process of claiming royalties; work with industry group to locate artists who are owed royalties; share artists’ contact information with other record companies; regularly review the status of royalty accounts; and turn over unclaimed royalties to the state, which will hold the monies until a claim is made.
Copyright 2004, Crain Communications, Inc


FDA panel rejects Genta cancer drug



A Food and Drug Administration advisory panel voted against approval of Genta Inc.’s cancer drug Genasense on Monday, after FDA officials questioned the company’s data.

The Berkeley Heights, N.J., firm is developing Genasense, a treatment for malignant melanoma, in partnership with French pharmaceutical giant Aventis.

Although Genasense failed to extend patients' lives long enough to be statistically relevant, the company argued that the drug helped to slow the progress of the disease and significantly shrank tumors. But the FDA panel, which voted 13 to 3 against approving the drug, raised questions about those results, including whether the timing of checks on patients' tumors could have skewed the findings.

Genta's stock has fallen drastically since Friday, when the FDA's skepticism of Genta's test results became known. By 10 a.m. on Tuesday, Genta's shares were at $4.98, down $9.45, or 65%, from its Thursday close of $14.43.
Copyright 2004, Crain Communications, Inc


PGA Tour to open Manhattan office



The PGA Tour is planning to tee off in Manhattan in July, with a new sales and marketing office.

"This is a great opportunity for the PGA Tour to enhance its presence and impact in the world's No. 1 marketplace," said the PGA Tour's Chief Marketing Officer Tom Wade in a statement, which will be released Tuesday. The new office--the exact location of which has not yet been determined--will also help the Ponte Vedra Beach, Fla.-based golf association attract new partners and "work more closely" with New York-based clients and broadcasters.

Ric Clarson, senior vice president of business development, will head the office. Mr. Clarson has been with the PGA for 21 years, including stints in the media and public relations offices, business affairs and corporate marketing.

The PGA Tour, which distributes $310 million in prize money annually, has also hired the William Morris Agency to be its liaison to the entertainment industry. The organization hopes to raise its profile beyond the sports world—specifically, to see its golfers featured in film, television, videos and new-media programs. William Morris’ clients include the National Football League and the U.S. Olympic Committee.
Copyright 2004, Crain Communications, Inc


Claims in cancer drug dispute dismissed



An arbitration panel has dismissed all claims related to a long-running dispute between Pfizer Inc.’s predecessor company, Pharmacia, and biotech company NeoPharm Inc. over a development agreement for two cancer drugs.

In 1999, Lake Forest, Ill.-based NeoPharm and Pharmacia & Upjohn, a subsidiary of Pharmacia (now Pfizer), entered a license agreement to develop two NeoPharm products aimed at fighting breast, lung and ovarian cancers. But three years later, in April 2002, NeoPharm filed an arbitration claim against its partner, charging it with having "failed to use reasonable efforts to develop" the drugs. In response, Pharmacia filed its own claim, alleging that NeoPharm had misrepresented its technology.

In November 2002, NeoPharm terminated the license agreement, saying that Pharmacia had indicated that it had stopped all development of the compounds. .Earlier this year, Neopharm said the U.S. Securities and Exchange Commission had launched an inquiry into the dissolution of the licensing deal.

NeoPharm's shares fell 9.2% Monday, to $18.56. Pfizer shares rose 1.3%. to $36.22. Neopharm said in a statement that it intends to work with Pfizer to resolve any remaining contractual issues.
Copyright 2004, Crain Communications, Inc


Silverstein jury says Swiss Re liable for one event



World Trade Center leaseholder Larry Silverstein was dealt another major blow on Monday, when a jury ruled that Swiss Reinsurance Co., the largest insurer of the Trade Center complex, was bound by a form that limits his recovery to one rather than two payouts.

Swiss Re will have to pay Mr. Silverstein about $877 million, or about one-quarter of the total policy, rather than the $1.7 billion he had hoped for. Mr. Silverstein’s argument in the case is that the Sept. 11 destruction of the Twin Towers constituted two separate events for insurance purposes.

Last week, the jury said nine of the complex’s 25 insurers were governed by the same form. Monday’s decision on Swiss Re means that Mr. Silverstein will be able to get maximum proceeds of $4.68 billion once all phases of the trial are over, while he has said he needs $7.5 billion for rebuilding at ground zero.

In a statement, Mr. Silverstein was unbowed, saying “a defeat in the courtoom is not a defeat for rebuilding. Whatever happens in court, we are determined to rebuild the World Trade Center, under Governor Pataki's leadership and in keeping with the Master Plan.”

But without the funds he was expecting, the developer will be under intense financial pressure to reduce his role in rebuilding the entire World Trade Center site: He will need to borrow to complete his projects, but banks are unlikely to lend for commercial office buildings without a major tenant.

The liability of 10 other insurance companies--and the fate of $1.13 billion more in coverage--is still up in the air. The jury said last week that three were bound by a form drawn up by Travelers, whose coverage terms will be decided by a new jury and trial. The liability of seven other companies, which weren't part of this trial, will be determined in a future phase as well.


Copyright 2004, Crain Communications, Inc


Quattrone found guilty



Former Credit Suisse First Boston banker Frank Quattrone has been found guilty on all three criminal charges against him--two for obstructing justice and one for witness tampering.

The jury announced its verdict on its second day of deliberations after a two-week trial. The trial was the second one for the former Silicon Valley banker, 48, whose first trial ended last October when the jury deadlocked. Mr. Quattrone was charged with obstructing an investigation in 2000 of how CSFB allocated shares of initial public offerings by urging colleagues to "clean up" their files.

He maintained during the trial that he thought the pending investigation related to another department. His lawyer says an appeal is planned.
Copyright 2004, Crain Communications, Inc


NBC names president of entertainment



NBC promoted Kevin Reilly, the network’s current president of primetime development, to president of NBC Entertainment, Jeff Zucker’s old job.

In his new position, Burbank, Calif.-based Mr. Reilly will continue to report to Mr. Zucker, who was promoted in December from entertainment president to the broader title of entertainment, news and cable group president. Mr. Reilly will assume his new duties effective May 27. Meanwhile, Mr. Zucker will relocate to New York.

Mr. Reilly began working at NBC 15 years ago, and was named to his current position in June 2003. Before that, he was president of entertainment at the FX cable network, where he was responsible for the Emmy-winning series The Shield as well as Nip/Tuck. A New York Times profile of Mr. Reilly last June noted that he helped to create long-running hits like Law and Order, E.R. and The Sopranos during his career at NBC and at TV studio Brillstein-Grey Entertainment.
Copyright 2004, Crain Communications, Inc


Venerable stationer shuts down

by Louise Kramer

Dempsey & Carroll, a stationer that dates back to the 1870s and a favorite of socialites, has abruptly shut its New York store, leaving virtually no information about its future.

The company closed its shop at 1058 Madison Ave. late last month, less than two years after relocating there from 110 E. 57th St., where it had been based for more than 75 years.

A landlord representative for the Madison Avenue shop, Dori Sedransk, vice president of David Frankel Realty, said the stationer left with no notice. The 1,044-square-foot shop was located at a prime corner space at East 80th Street.

Dempsey & Carroll, based in Baltimore, appears to have shut down entirely. Its Web site is no longer in operation. The store’s voicemail box is too full to take new messages, and several messages left at the company's headquarters in Baltimore were not returned. Company President George Ward did not return calls seeking comment.

"They were a venerable company in New York," says Paul Donaher, chief operating officer at another upscale stationer, Mrs. John L. Strong Co., at 699 Madison Ave. "I was just as surprised as anybody that they were closed."
Copyright 2004, Crain Communications, Inc


Milberg Weiss' two halves rev up NY firepower

by Tommy Fernandez

Milberg Weiss Bershad Hynes & Lerach, the dominant law firm for shareholder suits, will formally split into two firms today, and both halves are already moving to compete against each other in New York.

The New York-based, 110-lawyer firm, Milberg Weiss Bershad & Schulman, has hired former U.S. Assistant Secretary of Labor Geri Palast to head is corporate governance and public interest practices. Ms. Palast, who served seven years in the Clinton administration, will help the firm drum up new business from institutional investors and public pension funds. Milberg, which will be headed by Melvyn Weiss, 68, has added 12,000 square feet to its 1 Penn Plaza headquarters, which now totals 115,000 square feet. The firm, which will maintain offices in Boca Raton, Fla.; Wilmington, Del.; Seattle, Wash., and Los Angeles, Calif., has also set up new executive and management committees.

Meanwhile, the other half is readying itself for a quick entrance into New York. Named Lerach Coughlin Stoia & Robbins, the San Diego-based, 125-lawyer firm is led by William Lerach, 58, a former protege of Mr. Weiss’. Mr. Lerach says in an interview that his firm plans to set up a New York City office "sooner-rather-than-later." "We are going to be a nationwide law firm," he says. "And you can't be a nationwide law firm in this field and not have offices in New York." The Lerach Coughlin team has already filed complaints in district courts in New York, Florida, Pennsylvania, Missouri and Massachusetts, with targets including the New York Stock Exchange, Parmalat, Nortel, according to the Financial Times. It will maintain offices in Los Angeles and San Francisco, expand in Philadelphia and Washington, D.C., and add a branch in Florida as well as New York.
Copyright 2004, Crain Communications, Inc







Other Top Stories Making Headlines

Spitzer cuts music royalty deal


FDA panel rejects Genta cancer drug


PGA Tour to open Manhattan office


Claims in cancer drug dispute dismissed


Silverstein jury says Swiss Re liable for one event


Quattrone found guilty


NBC names president of entertainment


Venerable stationer shuts down


Milberg Weiss' two halves rev up NY firepower


© Copyright 2004, Crain Communications, Inc. All Right Reserved.